Recipient Fund Balances, 43966-43968 [2015-18138]
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Federal Register / Vol. 80, No. 142 / Friday, July 24, 2015 / Rules and Regulations
tribal implications and will not impose
substantial direct costs on tribal
governments or preempt tribal law as
specified by Executive Order 13175 (65
FR 67249, November 9, 2000).
The Congressional Review Act, 5
U.S.C. 801 et seq., as added by the Small
Business Regulatory Enforcement
Fairness Act of 1996, generally provides
that before a rule may take effect, the
agency promulgating the rule must
submit a rule report, which includes a
copy of the rule, to each House of the
Congress and to the Comptroller General
of the United States. EPA will submit a
report containing this rule and other
required information to the U.S. Senate,
the U.S. House of Representatives, and
the Comptroller General of the United
States prior to publication of the rule in
the Federal Register. A major rule
cannot take effect until 60 days after it
is published in the Federal Register.
This action is not a ‘‘major rule’’ as
defined by 5 U.S.C. 804(2).
Under section 307(b)(1) of the CAA,
petitions for judicial review of this
action must be filed in the United States
Court of Appeals for the appropriate
circuit by September 22, 2015. Filing a
petition for reconsideration by the
Administrator of this final rule does not
affect the finality of this rule for the
purposes of judicial review nor does it
extend the time within which a petition
for judicial review may be filed, and
shall not postpone the effectiveness of
such rule or action. This action may not
be challenged later in proceedings to
enforce its requirements. (See section
307(b)(2).)
List of Subjects in 40 CFR Part 52
Environmental protection, Air
pollution control, Incorporation by
reference, Reporting and recordkeeping
requirements.
Dated: July 10, 2015.
Ron Curry,
Regional Administrator, Region 6.
40 CFR part 52 is amended as follows:
PART 52—APPROVAL AND
PROMULGATION OF
IMPLEMENTATION PLANS
1. The authority citation for part 52
continues to read as follows:
■
Authority: 42 U.S.C. 7401 et seq.
Subpart GG—New Mexico
2. In § 52.1620(c), the table titled
‘‘EPA Approved New Mexico
Regulations’’ is amended by revising the
entry for ‘‘Part 1’’ under ‘‘New Mexico
Administrative Code (NMAC) Title 20—
Environment Protection, Chapter 2—Air
Quality’’ to read as follows:
■
§ 52.1620
*
Identification of plan.
*
*
(c) * * *
*
*
EPA APPROVED NEW MEXICO REGULATIONS
State citation
State
approval/
effective date
Title/subject
EPA approval date
Comments
New Mexico Administrative Code (NMAC) Title 20—Environment Protection Chapter 2—Air Quality
Part 1 ................................
General Provisions .....................................................
*
*
*
*
*
*
*
*
FOR FURTHER INFORMATION CONTACT:
Stefanie K. Davis, Assistant General
Counsel, Legal Services Corporation,
3333 K Street NW., Washington, DC
20007; (202) 295–1563 (phone), (202)
337–6519 (fax), or sdavis@lsc.gov.
LEGAL SERVICES CORPORATION
45 CFR Part 1628
SUPPLEMENTARY INFORMATION:
Recipient Fund Balances
I. Regulatory Background
Legal Services Corporation.
Final rule.
This final rule revises the
Legal Services Corporation (LSC or
Corporation) regulation on recipient
fund balances to give the Corporation
more discretion to grant a recipient’s
request for a waiver to retain a fund
balance in excess of 25% of its annual
LSC support. This final rule also
provides that recipients facing a fund
balance in excess of 25% of their annual
LSC support may submit a waiver
request prior to submitting their annual
audited financial statements.
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SUMMARY:
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LSC issued its first instruction on
recipient fund balances in 1983 to
implement what is now the
Corporation’s longstanding objective of
ensuring the timely expenditure of LSC
funds for the effective and economical
provision of high quality legal
assistance to eligible clients. 48 FR 560,
561, Jan. 5, 1983. Later that year, LSC
published a redrafted version titled
Instruction 83–4, Recipient Fund
Balances (‘‘Instruction’’). 48 FR 49710,
49711, Oct. 27, 1983. The Instruction
limited recipients’ ability to carry over
LSC funds that remained unused at the
end of the fiscal year. Id. Specifically,
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Register citation].
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This final rule is effective August
24, 2015.
BILLING CODE 6560–50–P
ACTION:
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DATES:
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AGENCY:
1/23/2015
Sfmt 4700
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the Instruction provided that in the
absence of a waiver granted by the
Corporation, a recipient must repay to
LSC any funds retained at the end of the
fiscal year in excess of 10% of its total
annual LSC support. Id. The Instruction
also prohibited a recipient from ever
retaining a fund balance in excess of
25% of its annual support, thereby
limiting the Corporation’s waiver
granting authority to fund balance
amounts of 25% or less of a recipient’s
annual LSC support. Id.
In 1984, LSC substantially adopted
the Instruction in a regulation published
at 45 CFR part 1628. 49 FR 21331, May
21, 1984. Part 1628 remained
unchanged until 2000, when LSC
promulgated revisions in response to
public comments and staff advice that
the rule was ‘‘more strict’’ than the fund
balance requirements of most federal
agencies. 65 FR 66637, 66638, Nov. 7,
2000. The revised rule provided the
Corporation with more discretion to
grant a recipient’s request for a waiver
to retain a fund balance of up to 25%
of its annual LSC support. Id. at 66637.
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Federal Register / Vol. 80, No. 142 / Friday, July 24, 2015 / Rules and Regulations
In addition, for the first time, the rule
authorized the Corporation to exercise
its discretion to grant a recipient’s
request for a waiver to retain a fund
balance in excess of 25% of its annual
LSC support. Id. The Corporation
reasoned that, by allowing for waivers to
retain that amount, ‘‘[t]he recipient can
better plan and find the best use for the
funds, rather than being forced into a
hasty expenditure simply to avoid the
limitation on the carryover of fund
balances.’’ Id. at 66640. The rule,
however, limited the situations
justifying a recipient’s request to retain
more than 25% of its annual support to
‘‘three specific circumstances when
extraordinary and compelling reasons
exist for such a waiver,’’ listed in
§ 1628.3(c). Id. at 66638. These
extraordinary and compelling
circumstances were restricted to the
following situations when a recipient
received income derived from its use of
LSC funds: ‘‘(1) An insurance
reimbursement; (2) the sale of real
property; and (3) the receipt of monies
from a lawsuit in which the recipient
was a party.’’ Id. at 66639. Although the
Operations and Regulations Committee
(Committee) ‘‘considered using a
standard of ‘extraordinary and
compelling’ for these waivers with the
three specific circumstances discussed
as examples,’’ it ultimately decided
‘‘that more guidance was required to
avoid erosion of the standard,’’ and the
three circumstances became exclusive
limitations, not mere examples. Id. at
66640. The LSC Board of Directors
(Board) adopted the revisions to part
1628 on November 20, 1999, and the
revised rule has been in effect since
December 7, 2000. Id. at 66637–38.
During the nearly 15-year period since
part 1628 was last revised, LSC grantees
have experienced various unexpected
occurrences outside of those listed in
§ 1628.3(c) that caused them to accrue
fund balances in excess of 25% of their
annual support. These occurrences have
included an end-of-year transfer of
assets from a former grantee to a current
grantee, a natural disaster that resulted
in a significant infusion of use-or-lose
disaster relief funds from non-LSC
sources, and receipt of a large attorneys’
fees award in an LSC-funded case near
the end of the fiscal year. In each of
these situations, LSC determined that
part 1628 prevented recipients with
legitimate reasons for having fund
balances exceeding 25% of their annual
LSC support from seeking and obtaining
needed waivers.
On January 22, 2015, LSC staff
presented the Committee with a
proposal to consider revising part 1628
to address the difficulties faced by
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Jkt 235001
recipients that encounter these types of
occurrences, yet are unable to justify a
waiver request to retain a balance in
excess of 25% of their annual support
under part 1628’s standards. The
Committee authorized LSC management
to add the matter to the Committee’s
rulemaking agenda.
As required by the LSC Rulemaking
Protocol, LSC staff prepared an
explanatory rulemaking options paper,
accompanied by a proposed rule
amending part 1628. On April 12, 2015,
the Committee voted to recommend that
the Board publish the notice of
proposed rulemaking (NPRM) in the
Federal Register for notice and
comment. On April 14, 2015, the Board
accepted the Committee’s
recommendation and voted to approve
publication of the NPRM in the Federal
Register. 80 FR 21700, Apr. 20, 2015.
The comment period remained open for
thirty days and closed on May 20, 2015.
On July 16, 2015, the Committee
considered the draft final rule for
publication and voted to recommend its
adoption publication to the Board. On
July 18, 2015, the Board adopted the
final rule and approved its publication.
Material regarding this rulemaking is
available in the open rulemaking section
of LSC’s Web site at https://www.lsc.gov/
about/regulations-rules/openrulemaking. After the effective date of
this rule, those materials will appear in
the closed rulemaking section of LSC’s
Web site at https://www.lsc.gov/about/
regulations-rules/closed-rulemaking.
II. Section-by-Section Discussion of
Comments and Regulatory Provisions
LSC received two comments during
the public comment period. One
comment was submitted by an LSC
recipient, the Northwest Justice Project
(NJP). The other comment was
submitted by the non-LSC-funded
nonprofit National Legal Aid and
Defender Association (NLADA) through
its Civil Policy Group and Regulations
and Policy Committee. Both
commenters were generally supportive
of LSC’s proposed changes to part 1628.
Section 1628.3 Policy
LSC proposed to revise § 1628.3(c) to
eliminate the language limiting the
extraordinary and compelling
circumstances in which LSC may grant
a recipient’s request for a waiver to
retain a fund balance that exceeds 25%
of its annual support. LSC staff
determined that the list of extraordinary
and compelling circumstances should
be illustrative, rather than exhaustive,
so that recipients that encounter truly
unforeseeable situations can avoid
having to make the difficult choice
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43967
between returning large portions of
unused balances and hurriedly
spending funds before the end of the
fiscal year. Whereas existing § 1628.3(c)
is limited to three circumstances where
a recipient receives a sudden infusion of
income, the new section expands the
types of situations that the Corporation,
in its discretion, may consider to be
extraordinary and compelling
circumstances. The new section adds
the example of a natural disaster to
illustrate a situation where a recipient
would be unable to expend its current
LSC grant for reasons other than the
receipt of new funds, such as being
forced to temporarily shut down
operations. The section also adds the
example of ‘‘a payment from an LSCfunded lawsuit, regardless of whether
the recipient was a party to the
lawsuit.’’ This revision makes clear that
a recipient may request a waiver to
retain a fund balance in excess of 25%
of its annual support when it receives
an award as the result of a court
decision in an LSC-funded case, even if
the recipient was not named as a party
to the action. LSC also proposed to
make a minor revision to § 1628.3(d) to
reflect the proposed redesignation of
certain paragraphs in § 1628.4.
Comments: Both commenters
expressed strong support of the
revisions to § 1628.3.
Section 1628.4 Procedures
LSC proposed to add a new
§ 1628.4(d) to expressly allow recipients
that expect to have a fund balance in
excess of 25% of their annual support
at the end of the fiscal year to submit
a waiver request prior to the submission
of their annual audited financial
statements. This addition will require
existing § 1628.4(d), (e), (f), and (g) to be
redesignated as § 1628.4(e), (f), (g), and
(h). The new § 1628.4(d) will list the
written requirements for a waiver
request to retain a fund balance in
excess of 25% of annual support. It will
also require recipients that receive early
approval to later submit updated
information consistent with the
requirements of § 1628.4(a) to confirm
the actual fund balance amount to be
retained by the recipient, as determined
by reference to its annual audited
financial statements. Accordingly, an
advance approval would be, in effect, an
approval of the reasons for a waiver and
of the proposed amount to be retained.
The recipient must later provide
confirmation of the actual amount of
excess funds it has retained. Finally,
LSC proposed to revise the introductory
text of paragraph (a), as well as
paragraphs (a)(2) and (a)(3), for clarity
and readability.
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Comments: Both commenters were
supportive of LSC’s proposal to allow
recipients with fund balances in excess
of 25% of annual support to submit
waiver requests prior to the submission
of their annual audit reports. NLADA
recommended that LSC further revise
§ 1628.4 to also allow recipients
expecting to have fund balances in
excess of 10% and up to 25% of their
annual LSC support to submit early
waiver requests. NLADA reasoned that
this would allow recipients seeking
such waivers to plan for the next fiscal
year with greater certainty. NJP, on the
other hand, expressed support for
continuing the standard waiver request
process for recipients with fund
balances that do not exceed 25% of
annual support. NJP stated that, in its
experience, such requests are more than
likely to be approved and that using
annual audit report information to draft
them assures that the amount approved
for retention is equal to the final audited
carryover.
Response: As stated in the preamble
of the NPRM, LSC staff found that
limiting early approvals to waiver
requests for fund balances in excess of
25% of annual support was proper in
light of the unique and significant
financial planning burdens faced by
recipients that experience extraordinary
and compelling circumstances causing
them to accrue substantial amounts of
unused funds. Furthermore, while the
Corporation will continue to apply the
heightened standard of ‘‘extraordinary
and compelling circumstances’’ to
requests to retain fund balances in
excess of 25% of annual support, it will
maintain the less burdensome standard
of ‘‘special circumstances’’ for requests
to retain fund balances that do not
exceed 25% of annual support.
Therefore, LSC believes that recipients
seeking to retain fund balance amounts
in excess of 10% and up to 25% of
annual support would not benefit
significantly from the minimal level of
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Jkt 235001
additional assurance that allowing the
early submission of waiver requests may
potentially provide. In addition,
recipients that receive early approvals of
such requests would later have to
provide confirmation of the actual
amount of excess funds they accrued
when they submit their annual audited
financial statements. LSC believes that
the additional time and effort required
by this process would not be justified by
the small amount of additional
assurance that it may provide.
List of Subjects in 45 CFR Part 1628
Administrative practice and
procedure, Grant programs—law, Legal
services.
For the reasons set forth in the
preamble, the Legal Services
Corporation amends 45 CFR part 1628
as follows:
PART 1628—RECIPIENT FUND
BALANCES
1. The authority citation for Part 1628
is revised to read as follows:
■
Authority: 42 U.S.C. 2996g(e).
2. Revise paragraphs (c) and (d) of
§ 1628.3 to read as follows:
■
§ 1628.3
Policy.
*
*
*
*
*
(c) Recipients may request a waiver to
retain a fund balance in excess of 25%
of a recipient’s LSC support only for
extraordinary and compelling
circumstances, such as when a natural
disaster or other catastrophic event
prevents the timely expenditure of LSC
funds, or when the recipient receives an
insurance reimbursement, the proceeds
from the sale of real property, a payment
from a lawsuit in which the recipient
was a party, or a payment from an LSCfunded lawsuit, regardless of whether
the recipient was a party to the lawsuit.
(d) A waiver pursuant to paragraph (b)
or (c) of this section may be granted at
the discretion of the Corporation
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Frm 00058
Fmt 4700
Sfmt 9990
pursuant to the criteria set out in
§ 1628.4(e).
*
*
*
*
*
3. Amend § 1628.4 by revising
paragraphs (a) introductory text, (a)(2)
and (3), and (d) to read as follows:
■
§ 1628.4
Procedures.
(a) A recipient may request a waiver
of the 10% ceiling on LSC fund balances
within 30 days after the submission to
LSC of its annual audited financial
statements. The request shall specify:
*
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*
*
(2) The reason(s) for the excess fund
balance;
(3) The recipient’s plan for disposing
of the excess fund balance during the
current fiscal year;
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*
(d) A recipient may submit a waiver
request to retain a fund balance in
excess of 25% of its LSC support prior
to the submission of its audited
financial statements. The Corporation
may, at its discretion, provide approval
in writing. The request shall specify the
extraordinary and compelling
circumstances justifying the fund
balance in excess of 25%; the estimated
fund balance that the recipient
anticipates it will accrue by the time of
the submission of its audited financial
statements; and the recipient’s plan for
disposing of the excess fund balance.
Upon the submission of its annual
audited financial statements, the
recipient must submit updated
information consistent with the
requirements of paragraph (a) of this
section to confirm the actual fund
balance to be retained.
*
*
*
*
*
Dated: July 20, 2015.
Stefanie K. Davis,
Assistant General Counsel.
[FR Doc. 2015–18138 Filed 7–23–15; 8:45 am]
BILLING CODE 7050–01–P
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Agencies
[Federal Register Volume 80, Number 142 (Friday, July 24, 2015)]
[Rules and Regulations]
[Pages 43966-43968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18138]
=======================================================================
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LEGAL SERVICES CORPORATION
45 CFR Part 1628
Recipient Fund Balances
AGENCY: Legal Services Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule revises the Legal Services Corporation (LSC or
Corporation) regulation on recipient fund balances to give the
Corporation more discretion to grant a recipient's request for a waiver
to retain a fund balance in excess of 25% of its annual LSC support.
This final rule also provides that recipients facing a fund balance in
excess of 25% of their annual LSC support may submit a waiver request
prior to submitting their annual audited financial statements.
DATES: This final rule is effective August 24, 2015.
FOR FURTHER INFORMATION CONTACT: Stefanie K. Davis, Assistant General
Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC
20007; (202) 295-1563 (phone), (202) 337-6519 (fax), or sdavis@lsc.gov.
SUPPLEMENTARY INFORMATION:
I. Regulatory Background
LSC issued its first instruction on recipient fund balances in 1983
to implement what is now the Corporation's longstanding objective of
ensuring the timely expenditure of LSC funds for the effective and
economical provision of high quality legal assistance to eligible
clients. 48 FR 560, 561, Jan. 5, 1983. Later that year, LSC published a
redrafted version titled Instruction 83-4, Recipient Fund Balances
(``Instruction''). 48 FR 49710, 49711, Oct. 27, 1983. The Instruction
limited recipients' ability to carry over LSC funds that remained
unused at the end of the fiscal year. Id. Specifically, the Instruction
provided that in the absence of a waiver granted by the Corporation, a
recipient must repay to LSC any funds retained at the end of the fiscal
year in excess of 10% of its total annual LSC support. Id. The
Instruction also prohibited a recipient from ever retaining a fund
balance in excess of 25% of its annual support, thereby limiting the
Corporation's waiver granting authority to fund balance amounts of 25%
or less of a recipient's annual LSC support. Id.
In 1984, LSC substantially adopted the Instruction in a regulation
published at 45 CFR part 1628. 49 FR 21331, May 21, 1984. Part 1628
remained unchanged until 2000, when LSC promulgated revisions in
response to public comments and staff advice that the rule was ``more
strict'' than the fund balance requirements of most federal agencies.
65 FR 66637, 66638, Nov. 7, 2000. The revised rule provided the
Corporation with more discretion to grant a recipient's request for a
waiver to retain a fund balance of up to 25% of its annual LSC support.
Id. at 66637.
[[Page 43967]]
In addition, for the first time, the rule authorized the Corporation to
exercise its discretion to grant a recipient's request for a waiver to
retain a fund balance in excess of 25% of its annual LSC support. Id.
The Corporation reasoned that, by allowing for waivers to retain that
amount, ``[t]he recipient can better plan and find the best use for the
funds, rather than being forced into a hasty expenditure simply to
avoid the limitation on the carryover of fund balances.'' Id. at 66640.
The rule, however, limited the situations justifying a recipient's
request to retain more than 25% of its annual support to ``three
specific circumstances when extraordinary and compelling reasons exist
for such a waiver,'' listed in Sec. 1628.3(c). Id. at 66638. These
extraordinary and compelling circumstances were restricted to the
following situations when a recipient received income derived from its
use of LSC funds: ``(1) An insurance reimbursement; (2) the sale of
real property; and (3) the receipt of monies from a lawsuit in which
the recipient was a party.'' Id. at 66639. Although the Operations and
Regulations Committee (Committee) ``considered using a standard of
`extraordinary and compelling' for these waivers with the three
specific circumstances discussed as examples,'' it ultimately decided
``that more guidance was required to avoid erosion of the standard,''
and the three circumstances became exclusive limitations, not mere
examples. Id. at 66640. The LSC Board of Directors (Board) adopted the
revisions to part 1628 on November 20, 1999, and the revised rule has
been in effect since December 7, 2000. Id. at 66637-38.
During the nearly 15-year period since part 1628 was last revised,
LSC grantees have experienced various unexpected occurrences outside of
those listed in Sec. 1628.3(c) that caused them to accrue fund
balances in excess of 25% of their annual support. These occurrences
have included an end-of-year transfer of assets from a former grantee
to a current grantee, a natural disaster that resulted in a significant
infusion of use-or-lose disaster relief funds from non-LSC sources, and
receipt of a large attorneys' fees award in an LSC-funded case near the
end of the fiscal year. In each of these situations, LSC determined
that part 1628 prevented recipients with legitimate reasons for having
fund balances exceeding 25% of their annual LSC support from seeking
and obtaining needed waivers.
On January 22, 2015, LSC staff presented the Committee with a
proposal to consider revising part 1628 to address the difficulties
faced by recipients that encounter these types of occurrences, yet are
unable to justify a waiver request to retain a balance in excess of 25%
of their annual support under part 1628's standards. The Committee
authorized LSC management to add the matter to the Committee's
rulemaking agenda.
As required by the LSC Rulemaking Protocol, LSC staff prepared an
explanatory rulemaking options paper, accompanied by a proposed rule
amending part 1628. On April 12, 2015, the Committee voted to recommend
that the Board publish the notice of proposed rulemaking (NPRM) in the
Federal Register for notice and comment. On April 14, 2015, the Board
accepted the Committee's recommendation and voted to approve
publication of the NPRM in the Federal Register. 80 FR 21700, Apr. 20,
2015. The comment period remained open for thirty days and closed on
May 20, 2015.
On July 16, 2015, the Committee considered the draft final rule for
publication and voted to recommend its adoption publication to the
Board. On July 18, 2015, the Board adopted the final rule and approved
its publication.
Material regarding this rulemaking is available in the open
rulemaking section of LSC's Web site at https://www.lsc.gov/about/regulations-rules/open-rulemaking. After the effective date of this
rule, those materials will appear in the closed rulemaking section of
LSC's Web site at https://www.lsc.gov/about/regulations-rules/closed-rulemaking.
II. Section-by-Section Discussion of Comments and Regulatory Provisions
LSC received two comments during the public comment period. One
comment was submitted by an LSC recipient, the Northwest Justice
Project (NJP). The other comment was submitted by the non-LSC-funded
nonprofit National Legal Aid and Defender Association (NLADA) through
its Civil Policy Group and Regulations and Policy Committee. Both
commenters were generally supportive of LSC's proposed changes to part
1628.
Section 1628.3 Policy
LSC proposed to revise Sec. 1628.3(c) to eliminate the language
limiting the extraordinary and compelling circumstances in which LSC
may grant a recipient's request for a waiver to retain a fund balance
that exceeds 25% of its annual support. LSC staff determined that the
list of extraordinary and compelling circumstances should be
illustrative, rather than exhaustive, so that recipients that encounter
truly unforeseeable situations can avoid having to make the difficult
choice between returning large portions of unused balances and
hurriedly spending funds before the end of the fiscal year. Whereas
existing Sec. 1628.3(c) is limited to three circumstances where a
recipient receives a sudden infusion of income, the new section expands
the types of situations that the Corporation, in its discretion, may
consider to be extraordinary and compelling circumstances. The new
section adds the example of a natural disaster to illustrate a
situation where a recipient would be unable to expend its current LSC
grant for reasons other than the receipt of new funds, such as being
forced to temporarily shut down operations. The section also adds the
example of ``a payment from an LSC-funded lawsuit, regardless of
whether the recipient was a party to the lawsuit.'' This revision makes
clear that a recipient may request a waiver to retain a fund balance in
excess of 25% of its annual support when it receives an award as the
result of a court decision in an LSC-funded case, even if the recipient
was not named as a party to the action. LSC also proposed to make a
minor revision to Sec. 1628.3(d) to reflect the proposed redesignation
of certain paragraphs in Sec. 1628.4.
Comments: Both commenters expressed strong support of the revisions
to Sec. 1628.3.
Section 1628.4 Procedures
LSC proposed to add a new Sec. 1628.4(d) to expressly allow
recipients that expect to have a fund balance in excess of 25% of their
annual support at the end of the fiscal year to submit a waiver request
prior to the submission of their annual audited financial statements.
This addition will require existing Sec. 1628.4(d), (e), (f), and (g)
to be redesignated as Sec. 1628.4(e), (f), (g), and (h). The new Sec.
1628.4(d) will list the written requirements for a waiver request to
retain a fund balance in excess of 25% of annual support. It will also
require recipients that receive early approval to later submit updated
information consistent with the requirements of Sec. 1628.4(a) to
confirm the actual fund balance amount to be retained by the recipient,
as determined by reference to its annual audited financial statements.
Accordingly, an advance approval would be, in effect, an approval of
the reasons for a waiver and of the proposed amount to be retained. The
recipient must later provide confirmation of the actual amount of
excess funds it has retained. Finally, LSC proposed to revise the
introductory text of paragraph (a), as well as paragraphs (a)(2) and
(a)(3), for clarity and readability.
[[Page 43968]]
Comments: Both commenters were supportive of LSC's proposal to
allow recipients with fund balances in excess of 25% of annual support
to submit waiver requests prior to the submission of their annual audit
reports. NLADA recommended that LSC further revise Sec. 1628.4 to also
allow recipients expecting to have fund balances in excess of 10% and
up to 25% of their annual LSC support to submit early waiver requests.
NLADA reasoned that this would allow recipients seeking such waivers to
plan for the next fiscal year with greater certainty. NJP, on the other
hand, expressed support for continuing the standard waiver request
process for recipients with fund balances that do not exceed 25% of
annual support. NJP stated that, in its experience, such requests are
more than likely to be approved and that using annual audit report
information to draft them assures that the amount approved for
retention is equal to the final audited carryover.
Response: As stated in the preamble of the NPRM, LSC staff found
that limiting early approvals to waiver requests for fund balances in
excess of 25% of annual support was proper in light of the unique and
significant financial planning burdens faced by recipients that
experience extraordinary and compelling circumstances causing them to
accrue substantial amounts of unused funds. Furthermore, while the
Corporation will continue to apply the heightened standard of
``extraordinary and compelling circumstances'' to requests to retain
fund balances in excess of 25% of annual support, it will maintain the
less burdensome standard of ``special circumstances'' for requests to
retain fund balances that do not exceed 25% of annual support.
Therefore, LSC believes that recipients seeking to retain fund balance
amounts in excess of 10% and up to 25% of annual support would not
benefit significantly from the minimal level of additional assurance
that allowing the early submission of waiver requests may potentially
provide. In addition, recipients that receive early approvals of such
requests would later have to provide confirmation of the actual amount
of excess funds they accrued when they submit their annual audited
financial statements. LSC believes that the additional time and effort
required by this process would not be justified by the small amount of
additional assurance that it may provide.
List of Subjects in 45 CFR Part 1628
Administrative practice and procedure, Grant programs--law, Legal
services.
For the reasons set forth in the preamble, the Legal Services
Corporation amends 45 CFR part 1628 as follows:
PART 1628--RECIPIENT FUND BALANCES
0
1. The authority citation for Part 1628 is revised to read as follows:
Authority: 42 U.S.C. 2996g(e).
0
2. Revise paragraphs (c) and (d) of Sec. 1628.3 to read as follows:
Sec. 1628.3 Policy.
* * * * *
(c) Recipients may request a waiver to retain a fund balance in
excess of 25% of a recipient's LSC support only for extraordinary and
compelling circumstances, such as when a natural disaster or other
catastrophic event prevents the timely expenditure of LSC funds, or
when the recipient receives an insurance reimbursement, the proceeds
from the sale of real property, a payment from a lawsuit in which the
recipient was a party, or a payment from an LSC-funded lawsuit,
regardless of whether the recipient was a party to the lawsuit.
(d) A waiver pursuant to paragraph (b) or (c) of this section may
be granted at the discretion of the Corporation pursuant to the
criteria set out in Sec. 1628.4(e).
* * * * *
0
3. Amend Sec. 1628.4 by revising paragraphs (a) introductory text,
(a)(2) and (3), and (d) to read as follows:
Sec. 1628.4 Procedures.
(a) A recipient may request a waiver of the 10% ceiling on LSC fund
balances within 30 days after the submission to LSC of its annual
audited financial statements. The request shall specify:
* * * * *
(2) The reason(s) for the excess fund balance;
(3) The recipient's plan for disposing of the excess fund balance
during the current fiscal year;
* * * * *
(d) A recipient may submit a waiver request to retain a fund
balance in excess of 25% of its LSC support prior to the submission of
its audited financial statements. The Corporation may, at its
discretion, provide approval in writing. The request shall specify the
extraordinary and compelling circumstances justifying the fund balance
in excess of 25%; the estimated fund balance that the recipient
anticipates it will accrue by the time of the submission of its audited
financial statements; and the recipient's plan for disposing of the
excess fund balance. Upon the submission of its annual audited
financial statements, the recipient must submit updated information
consistent with the requirements of paragraph (a) of this section to
confirm the actual fund balance to be retained.
* * * * *
Dated: July 20, 2015.
Stefanie K. Davis,
Assistant General Counsel.
[FR Doc. 2015-18138 Filed 7-23-15; 8:45 am]
BILLING CODE 7050-01-P